Jobs Are Disappearing Fast: Is There Any Relief in Sight?; U.S. Automakers Looking for $34 Billion on Capitol Hill; How to Keep Your Jobs and How to Get a Job

Aired December 6, 2008 - 13:00 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

CHRISTINE ROMANS, CNN HOST: Welcome to YOUR MONEY. I'm Christine Romans. Nothing is more critical to your money than your job and American jobs are disappearing fast. 1.9 million jobs have vanished so far this year bringing the unemployment rate now to 6.7 percent. The losses have spiked at the end of year. More than half a million of you lost your job in November alone, that's the biggest one-month cut in almost 34 years. More than 300,000 jobs were cut in October. More than 400,000 in September. That's more than a million jobs lost in just the past three months.

Some sectors, the hardest hit range from the trading floor to the assembly line, businesses and services lost 130,000 jobs, retail, trade, more than 90,000 and manufacturing 85,000 and just this week, some very familiar companies slashing jobs as well.

ALI VELSHI, CNN HOST: Retail trade losing 91,000 jobs in November, that's when they're supposed to be ramping up and the job losses are coming at companies where the names will be very, very familiar to you. A huge week for job cut announcements, AT&T slashed 12,000 workers. Credit Suisse, 5,300, DuPont laying off 2,500 employees. Viacom making 850 cuts and NBC announced plans to cut 500 jobs worldwide. That's more than 20,000 this week alone.

Some sectors are growing, though. Education and health care services, we talked a lot about those on this show. Government jobs, plus resources and mining, oil obviously, even though the price is low, we're still drilling for oil.

So is there any relief in sight? We are joined by a fantastic panel, Peter Schiff the president of Euro Pacific Capital, Lakshman Achuthan is the managing editor of the Economic Cycle Research Institute and Jim Ellis is the assistant managing editor of "Businessweek." Thanks to all of you for being here.

I want to start with you, Peter; you have been writing about and describing a coming crash and recession for some years now. I hate to say that some of the things that you've written about is outlandish as they seem do seem to be bearing out right now.

PETER SCHIFF, PRESIDENT, EURO PACIFIC CAPITAL: Sure, you know the problem, too, a lot of the jobs that are now being destroyed in our economy never should have been created in the first place, they were a function of our bubble economy. The fact that Americans were borrowing money and spending too much and as they can no longer spend because we're broke, all of these phony service sector jobs will have to disappear.

As painful as it is for the people who are in those jobs, the government has to stand aside and let it happen. We can't try to keep people in nonviable jobs. We have to go back to making things and it will be a very painful process and Americans are going to have to rein in their spending and start saving money.

VELSHI: I just want to ask you one thing, and I know this is theory that you've worked on, but we're now talking about officially close to $2 million jobs lost this year alone and it could be substantially more. I've heard you say it will mean millions of job losses to set this economy straight. What is the real equation there for people? What does your science and your academia tell you what to do when 5 million people are unemployed?

SCHIFF: That's how markets work.

VELSHI: Don't we have an obligation as a nation, as a modern economy to make sure that 5 million people aren't living in tents?

SCHIFF: There's nothing we can do. The government can't create jobs; they'll destroy jobs trying to do it. The government doesn't have any money all they have is a printing press. We need to free markets to create jobs; if the government wants to help they should reduce their burden on the economy. We should be cutting government spending. We should be cutting taxes and we actually should be raising interest rates. We're doing all of the wrong things and we're going destroy this economy.

ROMANS: Nobody is talking about doing any of those things. You're right. What they're talking about doing is spending a whole lot of money in fiscal stimulus and we have the Federal Reserve doing everything that it possibly can to keep the economy.

SCHIFF: Remember, we're in trouble, because we borrowed and spent too much money. We're not going to borrow and spend our way out of it. We have to do the opposite of what we've been doing. We're simply digging ourselves into a deeper hole right now.

ROMANS: Lakshman, we're not doing what Peter says we should be doing and no one says we are going to do that. What are we doing and will it work?

LAKSHMAN ACHUTHAN, ECONOMIC CYCLE RESEARCH INSTITUTE: Well one thing we are doing is we're probably cutting taxes which I think is one of the things you are prescribing. What we are doing here is they are throwing an ungodly amount of money at the economy. Not only the U.S., all of the major economies in the world are doing this, even China is doing it in a coordinated way.

VELSHI: You're a proponent of the idea that that will ultimately work.

ACHUTHAN: Look. What this will do is it will mitigate to a degree the pain on the way down. We are in a severe recession. As you were pointing out this economy went from a mild recession to a very, very severe recession. The numbers today they don't tell you anything about the future they just tell you that a few weeks ago we really accelerated to the downside.

When you look at the forward-looking indicators on the business cycle, they don't look years ahead, they look quarters ahead, they are tanking. They are at the worst readings they've been at in 60 years so we've got more numbers like we saw today on Friday coming in the months ahead and the one thing, the business cycle, the sharper the downturn, it tends to get a sharper upturn.

All of the things that we're doing here in the desperation of the moment are going to create all kinds of big questions on the other side in terms of the ideology of free markets, inflation and other things. Printing presses with the currencies.

ROMANS: But Jim Ellis says, it is too soon too start worrying about that, right? We are facing the beast that we're facing right now and then somewhere down the road there will be a recovery and a bubble that will have to be popped again, but what are we doing right now and will it work?

JIM ELLIS, ASSISTANT MANAGING EDITOR, "BUSINESS WEEK:" Well right now we basically have to find ways to free up the credit markets and get people to lend again and as bad as we ran into trouble with people borrowing a lot and spending, we've got to get people spending again. That is something that I think some people, particularly fiscal conservatives really worry about, but that's the bubble to come. That's next year's fight or the fight after.

Right now, the only thing to do is to get money coursing back do the economy and that will be a real challenge for the new president if and then we're talking about doing that and basically accepting deficits that we haven't seen in years.

VELSHI: Hold on, Peter, we are going to have this discussion in a way where our viewers can understand how they fit into it. This is a very smart discussion. You need to know how this affects you. The big buzz this week has been about the auto industry and whether or not to give it a bailout loan that is worth billions of dollars. You'll hear what one auto CEO claims would happen if his company went under.

(COMMERCIAL BREAK)

ROMANS: Oh the theater on Capitol Hill. U.S. automakers back on the Hill this week, this time seeking $34 billion to stay a float.

VELSHI: As far as hearing theaters goes it wasn't bad. They were getting down to brass tax. I spoke to Chrysler CEO Bob Nardelli who claims that the failing of his company alone would mean the immediate loss of 53,000 jobs at Chrysler, plus another 140,000 jobs gone with the closing of more than 3,300 dealerships. Add to that the loss in value of over 31 million Chrysler, Jeep and Dodge cars and you can see how staggering the numbers are, but are they actually true?

(BEGIN VIDEOTAPE)

ROBERT NARDELLI, CEO, CHRYSLER: That's reality, Ali. That is reality. Those are all -- those are all auditable numbers. Those are numbers that represent some industry experts that we have retained to give us the guidance and to make sure we responded. That was a specific question that Congress asked us to respond to. What would it cost? What is the impact and you're reading exactly the day that we submit it.

VELSHI: Let's go back to the testimony. We heard testimony from an official from the GAO, the Government Accounting Office, who said and these are quotes, in this case Chrysler is owned by a private equity firm. So you don't have the normal disclosures that you do for the other two companies, end quote. Americans are concerned about how public companies like Ford and General Motors will spend taxpayer- financed loans. How do you suppose they feel about a company that's ultimately shrouded in secrecy?

NARDELLI: Well, let me bring clarity to that. First of all, we submitted a 120-page document. Both the house and Congress agreed to make sure that those were reviewed in confidentiality, but the other thing that was suggested today and we totally support, is to provide an oversight, to provide transparency.

The government accounting group asked if they could have access, they didn't have jurisdiction to demand. We openly and willingly said come on in. We'll show you our numbers. We'll be happy to do a monthly report. We do that with our investors today, Ali. So we have no problem in providing transparency and accountability to those people if they're willing to give us the funds to allow us to survive.

VELSHI: Let me ask you, much has been made obviously about the jet situation and about you and the other two heads of automakers agreeing to take just a dollar in salary. It was widely reported that you agreed to take an annual salary of $1 when you were hired to run Chrysler about a year ago. I understand you took no bonus in 2008 and you won't get one in 2009, you don't have any stock options or restricted stock, you don't get health care and insurance benefits. Am I correct to assume that you've made exactly $2 since starting at Chrysler?

NARDELLI: Ali, that's right. I've agreed because I am committed to this. I've agreed no salary. I don't have any health care. I don't have any life insurance.

VELSHI: And there's nothing else other than the buck. You got a dollar at end of 2007? There's nothing else?

NARDELLI: That's it. That's it, but, look, my reason for being here -- when they asked me was to try and help Chrysler return to profitability. I am totally invested, Ali, in making that work.

(END VIDEOTAPE)

VELSHI: All right. We are joined again by Jim Ellis, Peter Schiff and Lakshman Achuthan to continue our conversation obviously and Bob Nardelli making his case for a loan to the auto industry. Jim, let's start with you. What's your view?

ROMANS: In a word, yes or no? Do they get a bailout?

ELLIS: In a word, yes. The political dimension here, we can talk whether from an economic standpoint this is wise or not, but this is a decision that will be made in Washington, even though we're talking about $34 billion in the world of what we've given away in the last couple of months we're talking about a rounding error.

A rounding error that has quite a lot of legislators who would like too see this happen even though the public polls lately have moved against it. If you look at dealerships alone you're talking about employment in a lot of towns around this country that probably does go more than a half million. A lot of people want to keep their jobs.

ROMANS: Just because we've spent an awful lot of money does it mean that it is right to spend more money?

SCHIFF: My mother always taught me that two wrongs don't make a right. We shouldn't bail out Wall Street. We shouldn't bail out Detroit. It will cost the economy more than the cost of the bailout which is more than the politicians think. We'll run into the hundred of millions to prop these companies up. The real cost is the damage to the economy that we do, because by propping it up, what are we destroying. What companies are going fail so they can stay in business?

ROMANS: You've made the point and a lot of these Congressmen have been making the point that there are dealerships across country and there are plants. Lakshman let's talk about around the country and you have a map that you can show us of how things have changed.

ACHUTHAN: Basically, as this recession has taken hold, job losses have gone from the coast and they've squeezed into the middle of the country and this is how a recession works. It's become more and more pervasive.

VELSHI: When you look back to January for instance it looked like --

ACHUTHAN: It was pretty mild. You have a sea of blue.

VELSHI: The red are the problem areas.

ACHUTHAN: The red are the problem areas and its no -- it's no mystery that California is in trouble and they're really screaming right new.

VELSHI: And you can see Michigan was in trouble back then.

ACHUTHAN: These are the ones that were on the early edge of it and then as the recession has taken hold over the course of the year you've seen job losses just really cover the map.

VELSHI: Let's advance that to October. ACHUTHAN: We're having a little bit of a delayed holdout in the middle of the country from the commodity bubble with both oil prices. Basically, the recession has fully gripped this country and you're seeing that in the latest data. There is a very pervasive job loss. It's regional and its industry wide.

And this is what a recession is. So in the middle of that, right? Ideological arguments that have merit aside, do you want to put a slug of people out of work right there? And if you do, you are going go from what's a severe recession. People act surprised by this number today. I mean, get over it. If you look at forward numbers they're going to get a lot worse.

SCHIFF: People will get put out of work and there's nothing we can do about it. What government policy is doing now is making sure that there are no new jobs waiting for them. We have to let the market work, we can't centrally plan the economy and have the bureaucrats in Washington try to figure out how to run the economy and try to make this green economy and how to micromanage the auto industry. It's never worked.

ACHUTHAN: All of that is a nice discussion before you get into a severe, global recession.

VELSHI: Jim started by saying this will ultimately be a decision made in Washington. The American people would like to know whether the government can help or will help.

ELLIS: The government can undoubtedly can help, the question is whether they'll want to shoulder the burden and shoulder the financial burden that goes with that.

VELSHI: With what money?

ELLIS: I have a feeling that the same way the government has come in and come up with really innovative ways to pump money into the financial system to make sure we have a banking system. They'll say something like manufacturing still does matter in the U.S. It's very difficult to imagine a modern society that's a leader society and economically that doesn't have the manufacturing.

VELSHI: That's a point that Peter will agree with.

SCHIFF: The solution is to save our money. Remember, he's talking about we need spending. When you're overweight the solution isn't that you eat more. When you're broke the solution isn't to spend more. If we're going to have manufacturing in this country, we have to stop spending money.

ELLIS: If people don't spend.

SCHIFF: We'll have a real economy.

ACHUTHAN: Some of the excesses have already been corrected. You have home prices coming down. You've had a lot of jobs lost. You're already having some of that creative destruction already happening. SCHIFF: Spending is not an economy.

ROMANS: We have to leave it there guys. He brings up a good question what we've got get to. That is where do you get the money? We borrow the money. We don't have the money and that's part --

VELSHI: How do we pay it back? If we had an image fair webcast that went on during the commercial break.

ROMANS: All right. You guys all have questions and we have answers and a lot more questions. How to keep your job and how to get a job next.

(COMMERCIAL BREAK)

ROMANS: The economy is losing jobs at a staggering rate this year so how can you take advantage of the areas where jobs are actually growing?

GILLIAM: It's I.T., its engineering, its health care, its finance and accounting. Those sorts of skill sets are still in strong demand and will be going forward.

ROMANS: For example, health care has added 369,000 new jobs this year. Aging baby boomers and new technology mean jobs.

GILLIAM: A health care growth, it's not just nurses and doctors, its I.T. experts, its finance and accounting experts.

ROMANS: Consider more training, more education. The unemployment rate for college educated workers is half what it is for the population as a whole. If you can, consider moving.

GILLIAM: We find candidates who would be willing to move, but they're in a situation where they're having difficulty selling their house. ROMANS: If you can't move, be patient. It may take months to find a new job and don't automatically reject an offer to keep your job for less pay.

GILLIAM: I think if all other things about your employment situation are good for you, if you like the industry you're in, you like the company you work for, you enjoy your job then this is a short-term situation.

(END VIDEOTAPE)

ROMANS: All right. So the goal is to keep the gap on your resume as short as possible. It might be painful to have to tell your employer, OK, fine, I'll take the 10 percent pay cut just to stay in this company in a job that's lateral or even lower, but in this market a lot of folks are telling me that might be the best bet just for now, short term, it might be the best bet.

VELSHI: We've asked you to send in your questions or concerns about the job market and we've assembled a team to give you advice. We are joined by Brad Karsh, the president and founder of Job Bound, Robin Bond an employment attorney and Sonia Alleyne, a careers editor at "Black Enterprise."

Brad let's start with you, let's go right to the questions. We got an e-mail from Nicky who says I've been laid off twice in the past year. Both layoffs were unavoidable. The first time everyone was let go because of a merger and the second time my entire department was laid off. Wow! Will employers think I'm a poor performer? Brad.

BRAD KARSH, PRESIDENT & CEO, JOBBOUND: You just heard about the dire situation about the economy, we've lost half a million jobs in November 2 million this year alone, it's hard to say that a half a million of those people are poor performers. The fact of the matter is the stigma that is associated with being let go is much less dramatic than it was 10 years, five years ago, so the key word for Nicky and other job seekers in his position is to make sure that their story is told.

So, if I pick up a resume as a recruiting direction I see that you've lost or haven't worked or let go from your last two jobs I might raise some questions, but if you have a chance to talk about it and network your way into the company, or even explain it in your cover letter it helps to disassociate it from the initial stigma associated with the job loss.

ROMANS: All right, Sonia, we have one for you from Javier. Javier writes to us, he says I'm a recent college graduate and I've been looking for a job in two months and I've just been offered an unpaid internship. This is not ideal because I have to start paying off my college loans soon. Should I take it since I haven't found anything else? That's so hard. It's free labor.

VELSHI: That's worse than going to work for free.

SONIA ALLEYNE, CAREERS EDITOR, "BLACK ENTERPRISE:" This is not the time too turn down opportunities and the good thing about internships and they can lead to paying opportunities. So Javier has to work to be a stellar intern and do a great job there and also be really diligent about developing the relationships that he can use later on.

VELSHI: And he's in the game. It's the networking, he's there.

ROMANS: It's a foot in the door. It really is a foot in the door and that's so important.

VELSHI: Robin, here is one from Rick. It says I was fired from my job a few months ago and a competitor recently offered me a position. My previous contract included an elaborate non-compete clause for two years. Is there anything to make this non-compete clause invalid after being fired?

ROBIN BOND, EMPLOYMENT ATTORNEY: Sure. Non-competes are governed by two main factors, number one is state law and number two is by the facts and the facts are different in every situation and that's usually where we can attack these types of situations.

Now, some states like California don't want to enforce non- competes at all. Other states won't enforce a non compete if you were fired for poor performance and they'll use the worthless employee doctrine, if you were so bad the worst thing is to go to the other guy's company and drive that business into the ground.

That's a good argument. Some states will say, hey, there's economic distress in the company. We won't enforce a non compete. There are a lot of things you can do and all courts look at four factors. Is this reasonable in terms of scope, duration, did you get paid good consideration and is there a legitimate need for the non- compete. I say see a good employment lawyer in your state and attack this.

ROMANS: All right. Brad, quick one for you. Joy asked how do I find out what fields are in need of workers in the Orlando area. I'm willing to go back to school and retrain to start a career. In general, what jobs can people retrain for and how long does it usually take, Brad?

KARSH: You just heard a couple of industries that are hiring are health care and education. Depending on what you want to do specifically, that training time could be from three months to a couple of years. So let's take health care, we know it's one of the fastest growing industries and we know that Florida with a high percentage of aging baby boomers and older folks will have a real need for health care.

She can do anything to go back to becoming a registered nurse to do something that's more in the technician field that could be as little as three to six months. Education is a great field to consider right now and that training could be anywhere from a year to two years, depending on what your undergraduate degree is.

VELSHI: Two of the growing industries in this terrible, terrible job market.

ROMANS: If you are looking for a job right now and you can figure out a way to get one of these hospitals to underwrite you for the nursing program or a drug company that's looking for people too sell their equipment.

VELSHI: This is a great time to search everything. Ask everybody. Sonia made the point, network. You have to turnover a lot of stones.

ROMANS: We have more e-mails. And we'll be turning more stones with Sonia, Brad and Robin in just a minute.

VELSHI: No matter where you're from the troubles in the U.S. auto industry affect the town you live in.

Congress could tap a $25 billion fund for making green cars to help keep the nation's big three automakers afloat. House Speaker Nancy Pelosi is backing off her opposition to using the money. White House and congressional aides are working this weekend to craft a bailout loan for GM, Ford and Chrysler.

President-elect Barack Obama lays out parts of his plan to put millions of people back to work. He says he'd have invested in energy- efficient public buildings, repair roads and modernize schools. November saw 533,000 job cut, the biggest monthly loss since 1974.

And five Blackwater security guards totally have been indicted in a deadly Baghdad shoot out. The chargers have not been made public. The Associated Press is reporting that a sixth guard is negotiating a plea deal. Seventeen Iraqi civilians were killed when guards opened fire in a crowded intersection last September. Blackwater says the guards acted in self-defense.

Now back to more of YOUR MONEY.

ROMANS: To hear all about the auto industry trouble maybe you think it doesn't affect you. It does.

VELSHI: It affects everybody.

Mary Snow joins us now with a look at the effect the auto bailout loan or the discussions about it are having on local government nation wide. Mary.

MARY SNOW, CNN CORRESPONDENT: Ali, Christine, as big three automakers try too convince Congress to rescue the auto dealers they are waiting on pins and needles, they are dependent on automakers. Hundreds have been forced to shut down this year alone and as they lose money, communities and state governments are feeling it.

(BEGIN VIDEOTAPE)

SNOW (voice over): Kevin Holdorf says, he's never seen a slowdown this bad in the 22 years he's been at this New Jersey dealership. He says roughly 55 new cars sold last month. A third fewer sales than good times and that's better than most. While staff and spending have been cut the effect goes far beyond the dealership doors.

KEVIN HOLDORF, GENERAL MOTORS, BELLAVIA CHEVROLET BUICK: We deal with charities in the area. Senior citizen centers, local high schools and little league and if any business, especially ours is having a rough time, that's less than we can give back.

SNOW: So far this year the National Automobile Dealer's Association says about 700 of roughly 21,000 dealers nationwide have gone out of business and the number is growing. The group is taking out ads urging help from the federal government.

ANNETTE SYKORA, CHAIRMAN, NATL. AUTIOMOBILEDEALERS ASSOC: This is a local public faith of the automobile industry and communities and towns all across America and so when they go out of business, not only do we lose consumer convenience and competition, but then that economic impact is very dramatic.

SNOW: Part of that dramatic impact is one are one policy analyst is the drop in state revenue.

IRIS LAV, CENTER ON BUDGET AND POLICY PRIORITIES: In a typical state the auto sales will make up between maybe 12 and 15 percent of all sales tax revenue.

SNOW: Some states could be higher. In New Jersey one trade group estimates auto dealers make up about 20 percent of all retail sales. It estimates that for every 1 percent drop in new car sales, the state loses more than $8 million in sales tax revenue and it comes at a time when states are struggling and people are looking to government for more help with unemployment benefits and social services.

LAV: State and local governments are pretty stocked unless the federal government comes in and helps them out.

(END VIDEOTAPE)

SNOW: Now, it's estimated that by the end of this year three million fewer cars will be sold compared to a year ago and that means a loss in billions in sales tax revenues, with car sales expected to drop even further.

VELSHI: Now what is the interesting about that even though it is three million fewer cars, the way the sales have dropped off at the end of year, the pace has slowed even more than that. It's only three million fewer cars because the beginning of the year was actually still relatively healthily; this is a big hit, Mary. You've been talking to people who are really hit by this.

ROMANS: Thanks, Mary. VELSHI: Well, we've been talking a lot about the auto industry and the big three's attempt to secure -- do we even call them the big three? They're not that big anymore, but their attempts to secure a bailout loan by the federal government.

ROMANS: The big question, of course, is the big three, the little three; everyone wants to know would a bridge loan be enough to make American automakers competitive again?

VELSHI: Peter Valdez-Dapena follows the auto industry for CNN Money. David Kiley is a senior correspondent at "Buisinessweek." They both join us now. Fundamentally David this is the question. Should we give them the money? Will it get paid back, but ultimately are they viable? Are they competitive or are we just keeping a bunch of people employed?

DAVID KILEY, SENIOR CORRESPONDENT, "BUSINESSWEEK:" I happen to think they are viable. You have to remember they still are the big three because those three companies still sell about 45 percent of the cars in this country and the other 55 percent are made up, you know, from about 15, 16, 17 other companies.

VELSHI: But still, really, three main ones and then a bunch of others.

KILEY: Right. But the thing to remember here is in terms of viability, the product is much better. They were on their way to a very substantial restructuring that really would have kicked in and, I think, started to deliver a lot of real profit in 2010 and 2011, but they ran into this credit tsunami.

VELSHI: Right.

KILEY: That really, they were kind of making their way across the river trying not to shed tens of thousands of jobs all in one shot, and they just got swamped by this credit tsunami and the Wall Street meltdown.

VELSHI: Peter makes the same point right, that they were at least in Ford's case, they were really making something headway.

PETER VALDES-DAPENA, WRITER, CNNMONEY.COM: They were really making some headway. It's important -- some things about these business plans that were put together this week. First of all it's not like when this request came from Congress, it's not like they went back to Detroit and brewed a big pot of coffee and stayed up all night thinking of big stuff to do. These were plans that were in place that they're already working on they're moving forward with.

We've had revelations here, GM cutting Saturn, possibly and cutting Saab that we didn't know about, but I'm quite sure, they were talking and ford has said in its request that unless one of these other guys goes down and that sends a shock wave through the industry we're not going need this money. Ford in particular is OK as long as there's not a shock to the industry from one of the others going down. So that indicates that at least they have had a plan for viability for the future.

ROMANS: I want to ask both of you, I want to ask you first David , because I am really interested in what you think of these three gentlemen, this is the most important presentation of any three of these executives in their business career most likely. Did they sell it?

Did they -- do you think they gave the message they needed to give and how much of this, in your view, is politics and theater and that this is about -- you know, the only -- here I'm going to step back and say this little statistic, 36 percent of Americans are not in favor of the bailout. Well, only 23 percent -- approval rating in Congress is only 23 percent. So Americans dislike Congress more than they dislike the bailout.

KILEY: I think they made incremental progress from last month's hearing to this month's hearing. What I think has changed for the politicians are the job situation. Some of them are idea logically opposed to helping the automakers. They'd also like too see the union busted. Some of the southeastern Republicans in this country would really like too see the union busted.

So -- and the bailout is very unpopular in those places because you've got all the foreign automakers that have opened up these non- union plans, but there's a lot of political theater here and I, quite frankly, think what's going on happen is that they all will figure out a way to get the automakers about $4 to $8 billion to kind of allow them to crawl into the Obama administration.

And they're kicking the can to President Obama for him to really approve or allocate the money that the auto industry's going to need under very tight oversight, particularly next year, but these Congressmen and senators, most of them do not want to be caught voting for a big bailout with their home constituents when this is very unpopular.

VELSHI: And the others from those areas that don't want to be on the watch when it's voted down. Thanks to both of you, Peter, I appreciate having you here as well.

ROMANS: All right. What you absolutely need too know right now this very minute to make money in your 401(k).

(COMMERCIAL BREAK)

VELSHI: Well, when stocks have been tumbling like they've been for the last few months there's a lot of temptation to ignore your 401(k) and look the other way, so to speak, hoping it all end well. Bad move. Bad move.

ROMANS: I hear this all of the time. I'm just not going open it. That's not going make anything better. That's not going to make anything better and you can't put your head in the sand. You open it up and figure out what to do.

VELSHI: I don't open it at home; I bring it to the office when I'm in a state to actually do business.

ROMANS: Walter Updegrave, the senior editor at "Money" Magazine he makes a living knowing all things 401(k). Open it up.

WALTER UPDEGRAVE, SENIOR EDITOR, "MONEY" MAGAZINE: Sit down before you open it up.

VELSHI: Be in a good mood. Deal with it.

ROMANS: Pour yourself a drink.

VELSHI: I don't any strategy that was in the stock market this year that would have helped you.

UPDEGRAVE: Right. There's almost no place to hide this year and so people are going to -- they're going have some losses, but you have to remember if it's 401(k) you're investing, you're probably investing long term. Granted, there are some people who are approaching retirement and those people, it's not as long term.

They still are going to spend many years in retirement but they want to be more careful because they don't want to have any steep downturns and there's evidence that shows that some people in their mid-50s to mid-60s going into this downturn are probably much more heavily invested in stocks than they should have been, whether they did that just because they got careless and didn't keep track of their portfolios or just wanted to take a lot more risk.

But there's been some research that shows upwards of 40 percent of people in their mid-50s to mid-60s had 80 percent or more of their 401(k) s in stocks and that's way too much.

ROMANS: Rebalance, rebalance and should people be rebalancing right now? Should I be looking and switching the allocations in there to make sure that I have the right mix?

UPDEGRAVE: Well two things. First of all rebalancing is a tactic that is part of a strategy of asset allocation or just spreading your money around.

VELSHI: Which is the most important part of investing?

UPDEGRAVE: That is the important thing. That is the key. So how much are you going have in stocks and how much are you going to have in bonds, it is that mix that is going to determine how well you do in upturn, and how much you get hit in down turn. So you definitely want to set that first and you can go to -- there's a nifty tool on the CNNMONEY Web site called the asset allocater and it tells you how to spread your money around.

Once you have done that, then the idea is to rebalance back to the mix that's right for you and that's what keeps you on track. A lot of people today are saying I don't want to rebalance. Right now rebalancing means you probably sell some of the assets that have done well, bonds and put some money in stocks and people are saying why would I want to put money in stocks right now? That doesn't make any sense, but that's the good thing about rebalancing is it forces you to get back to where you should be and you're buying stocks at bargains. If you only rebalance, if you put it off all of the time until stocks are going up, you're only buying --

VELSHI: This is science. We always believe Walter anyway, but the fact that this is something you have to think about.

Thank you very much, Walter Updegrave for being with us.

Now if you haven't worked for some time or maybe you took some family time off, not worry. How to re-enter the workforce successfully.

(COMMERCIAL BREAK)

VELSHI: We're joined again by our job experts, Brad Karsh, Robin Bond and Sonia Alleyne and we're answering more of your e-mail questions from our viewers.

Robin, here's one from Andy for you. I was self-employed for several years, but my business dried up three or four years ago. I'm currently unemployed, but I can't file unemployment claims. What do I have to do to be counted among the unemployed? That's a really good question.

BOND: Well, first, you have to join the ranks of the employed because unemployment doesn't go to business owners or independent contractors so the first thing you need to do Andy is get a job with someone other than yourself.

Secondly, lose your job due to no fault of your own and, third, be able to prove to the Unemployment Compensation Department of your state that you are actively seeking work. You had said three or four years ago your business dried up, but unemployment benefits are determined by each state and they're really designed just to be a short-term fix to provide for the necessities of life while you're seeking employment.

Anybody who is interested in knowing what their state provides should just go on to Google and type the name of their state and unemployment compensation benefits and you can find out exactly what is provided to you in your state.

ROMANS: If Andy's issue and situation is one reason why so many economists tell me that they worry that the true reality of the labor market is actually worse than we think it is.

VELSHI: The unemployment rate went up to 6.7 percent from 6.5. Almost half a million people dropped off the unemployment roll.

ROMANS: Here's another question, this one is for Sonia and this is from Claire. In this nightmare economy, how hard is it to re-enter the workforce if you've not worked for almost a decade. What should this type of job seeker do? Imagine if you're trying to enter -- you've got to get a job to help your family and you've been home. You've been the provider at home and now suddenly you're trying to get in this horrible job market.

ALLEYNE: This is a tough one, but she'll have too spend this time assessing what her skills, her experience and her talents are because she'll have to put together a compelling resume, an experienced resume because she's been out of the job market for too long.

VELSHI: You mean so other words how does that differ? It's not most of your day.

ALLEYNE: She'll focus on her talents and her experience and what she can bring to the next employer. She didn't say what her industry is but I would join a professional organization. She needs to start networking right away, but not only joining it, but be active so that her colleagues and her members can see what kind of worker she is.

I would also get on Linkedin, Facebook. She needs to develop this community and finally I would focus a small or mid sized company because they always can't afford to pay for the expertise that they like, but if you're a hard worker and you've been involved in the industry, and you seem like you are a team player, you might be a catch to them.

VELSHI: Brad, you made this point frequently that your resume should be an advertisement of your strengths and your ability to bring to the company, not a chronological listing of your work. I think that is a point that you have made. Before you answer that, I want to give you a question from Colleen, who says, how can you get your resume out there without advertising to your current employer that you're looking? Is there way to discretely post your resume online without revealing your identity?

ROMANS: Ali, did you put this one in there?

VELSHI: Yes, give me the answer.

KARSH: Colleen, for your friend, tell him he can go to the major job sites. Kind of a resume blocking tool that allows you to put in company names that cannot search your resume. On Yahoo!, Hot Jobs, it's called hot block and allows you the ability to x out certain companies.

VELSHI: So you better know the name of your company, though. It could be CNN.

ROMANS: Turner broadcasting, which owns CNN.

VELSHI: My point. Very interesting point.

ROMANS: Tell us a little more, Brad, about how it has to be, it cannot be chronological but what you can do and not just the order in which you have done it. How do you do that?

KARSH: The key is focus on your specific accomplishments. Even if it was ten years ago, focus on a lot of those accomplishments. For a lot of moms and other folks who have been out of the workplace for an extended period of time, they learn time management skills, taking three kids to soccer. Nobody wants to see that on a resume. We understand that.

What we want to see is what you have done in the past, what have you done to fill in some of those gaps. I joined networking organizations. I volunteer. Now is a great time to volunteer to get something on your resume. If you want to get back into marketing, go marketing for the American Cancer Society. Boom, you have some experience.

VELSHI: Folks, thank you to three of you, to Robin and to Sonia and Brad. Thank you to all of you for your e-mails. Honestly this has been so great for a lot of our viewers we are getting a lot of e-mails just appreciating your questions and the answers from our panel. And, frankly, I'm learning a lot.

ROMANS: I think it is great and this is the kind of information we are going to need for the next year. Knowledge is power. Knowledge is power.

One view of why president-elect Barack Obama's pick for treasury secretary might be the wrong one. But first, this week's "Right on Your Money."

(BEGIN VIDEOTAPE)

ROMANS (voice over): Budgets are tight this holiday season. Here's a gift for you that will last for years to come. An I.R.A.

HILARY KRAMER, AUTHOR, "AHEAD OF THE CURVE:" Contributing money to an IRA may not be a sexy option as of present but it makes a lot of sense and there's value over the long term, especially if you're younger because you have decades ahead of you for the money to grow.

ROMANS: You have three options for opening an I.R.A. -- a bank, a brokerage or a mutual fund company. Most I.R.A.s have a monthly minimum investment. Do your research and choose the one that fits you best. And remember, age is a factor.

KRAMER: The younger you are, the more you want to put in, the more you want to be consistent over the long term with your investing because you're going to see it grow. There's a multiplying effect that takes place and it is unbelievable, the kind of money that over -- over 10, 20 and 30 years that you can eventually amass. Now if you're an older investor, it's still always the right time to start saving but you're going to make different choices.

ROMANS: And that's this week's "Right on Your Money."

(END VIDEOTAPE)

(COMMERCIAL BREAK)

ROMANS: Our CNN Money team joins us now. Jennifer Westhoven, business news correspondent with "Headline News" and of course Poppy Harlow, CNNMONEY.com. VELSHI: All right. Poppy, let's start with you. We have been talking how president-elect Barack Obama has been widely proclaimed for his pick of Timothy Geithner as the incoming treasury secretary. You have heard something else.

POPPY HARLOW, CNNMONEY.COM CORRESPONDENT: Yes, not everyone likes Geithner as the pick. I had a chance yesterday Ali to sit down with a banking analyst. Pretty well known I think, Chris Whalen he is a major critic of Obama's choice for treasury secretary Timothy Geithner. He said he is not the right man. One of his biggest criticisms, inconsistency. Take a listen.

(BEGIN VIDEO CLIP)

CHRIS WHALEN, INSTITUTIONAL RISK ANALYTICS: Bayer should have been put into bankruptcy. When Bayer wasn't put into bankruptcy, Geithner told the street, hey we're here to bail you out and then they let Lehman Brothers fail. It scares the heck out of everyone and most importantly it is a surprise to the market. So then we go to AIG, where they again switch positions if you will and bail out the largest derivatives casinos on Wall Street, or one of them.

(END VIDEO CLIP)

HARLOW: I asked him, so are you arguing that you should have bailed Lehman Brothers instead, he said no that is not it. Lehman had to fail but he shouldn't have helped facitate a buy out for Bearn Sterns then let Lehman fall and then help bail out AIG. That's what he's saying, inconsistency. He also said, listen, this is a guy who worked at the treasury a long time ago under Larry Summers. He's not changed. He's not new. Obama promised us change that is his argument.

ROMANS: I think that one of the things people say is Obama's consistency is he is at the helm but I see he's inconsistency in terms of what he has done.

VELSHI: And it could be flexibility too, the ability to change tact. But what a lot of folks are wondering, is for all of this discussion about all these plans and all of these bailouts, what is happening to mortgage holders and mortgage buyers, troubled mortgage people? Jennifer what's happening on that front?

JENNIFER WESTHOVEN, CNN HEADLINE NEWS CORRESPONDENT: This is my favorite story of the week. It's not the triage for the housing market that we need. It is not going to help anybody that is in foreclosure right now. I think that is something that so many lawmakers and Obama are talking about that something has to happen. But at least in this vacuum of leadership that is going on right now, we are seeing this very unorthodox idea from the treasury.

They are really trying out all kinds of programs they have never tried before. In this case, they are going to use mortgage-backed securities and their clout with Fannie Mae and Freddie Mac to lean down on interest rates, to push them down to 4 1/2 percent for fixed- rate loans. I think that's wild because they always worked from underneath the interest rates. Now they are pushing them from the top. I do think for the patient who's bleeding, they are giving them vitamins but at least we're seeing changes.

ROMANS: The beneficiaries of that program I think are people with good credit. If this doesn't help people --

WESTHOVEN: But --

VELSHI: The market because people can buy.

WESTHOVEN: It helps everybody seeing their home value.

ROMANS: And the houses that get seized from the refinancing, right?

VELSHI: But it also could help people who are struggling because they haven't been able to sell their home to recover their money. Others can buy; it could bring the price of your home up.

HARLOW: But does it help the people that are the worst off right now? Does it even get to the heart of the problem?

ROMANS: I think people wrote, it's not a silver bullet. There is no silver bullet here.

WESTHOVEN: Does it help a little? Maybe.

ROMANS: All right. Poppy, Jennifer thanks, guys.

VELSHI: Listen make sure you join us every week for YOUR MONEY. Saturdays at 1:00 p.m. Eastern and Sundays at 3:00 right here on CNN.

ROMANS: The economy is issue number one. We are here at CNN are committed to covering it for you. Stay with the CNN money team every day for the latest news on your money and you can logon on 24/7 to CNNMONEY.com.